tv The Profit Social CNBC November 29, 2014 12:00am-1:01am EST
are you kidding? lemonis: i'll be checking in. carolyn: and i want you to. lemonis: see you soon. carolyn: okay. lemonis: bye, ladies. woman: bye! greenville, south carolina, is home to west end coffee... ...a regional roaster with great product... that's pretty awesome. ...but even better margins. -we sell it for how much? -john: $48. lemonis: that margin's killer. co-owners are living proof that you should never mix business with pleasure. john: [bleep] you're horrible at doing the right things until you're forced to do it. lemonis: i not only have to put the right process in place... you made a huge inventory mistake. ...i have to figure out a way for the owners to coexist. you're so busy fighting that you're not busy selling. if not, west end coffee will grind to a halt. all right. rookie mistake. my name is marcus lemonis,
and i fix failing businesses. if you don't like money, don't follow my process. i make the tough decisions. we're closing the store. we're done. i'm not talking about it anymore. i back them up, spending my own money. it's not always pretty... man: perfect flavor. lemonis: ...but this is business. you got to trust the process. i do it to save jobs, and i do it to make money. thanks for your business. this is "the profit." [ bell rings ] west end coffee provides freshly-roasted gourmet coffee to local restaurants and specialty shops. co-owners becky schramm and john brown were in a relationship when they bought west end coffee for $500,000 in 2012. but a year later, their relationship ended in a nasty breakup, and trouble started brewing at the business. john: you're ridiculous. you don't know what you're doing.
lemonis: and their employees are constantly caught in the middle. man: i think they're both good people. i just think they don't like each other. lemonis: with their business relationship strained and their losses mounting, time is running out. there's a huge market for freshly-roasted gourmet coffee. if i can just get john and becky to put their claws away... john: so, now you think you got a big [bleep] and you think you can run things, you know everything. lemonis: ...and act as a team... -john: i'm done. -becky: whatever. lemonis: ...we'll be making money in no time. bryan: welcome to another day in the west end. lemonis: [ inhales deeply ] smells good. [ sniffing ] [ sighs ] john: tired of you blaming me. if you think you're so [bleep] great, go do it. -becky: that's why i'm here. -john: [ sarcastically ] right. you want him to resolve our personal issues. that's what you want. becky: i'm worried about the business, not our personal issues. lemonis: there's two things that i found when i walked into west end -- the smell of great coffee, which was nice, and the cursing -- not so nice. -hi, there. -becky: hello.
-lemonis: i'm marcus. -becky: i'm becky. lemonis: becky, nice to meet you. becky: very nice meeting you. john: marcus, privilege. john brown. lemonis: john, nice to meet you. john: nice to meet you, sir. becky: thank you for coming. lemonis: the smell when you walk in here is awesome. john: it is. that's what everybody says. lemonis: and so, is this whole warehouse -- is all the manufacturing? john: it is. everything is in this 3,500 square feet. lemonis: well, why don't we take a look around? john: please. please. this is our storefront. we have an extremely loyal customer base. people are coming in buying 7, 8, 9, 12 bags of coffee. there's a lot of locals that live maybe 20 miles from here. they don't want to drive the downtown, so we do ship. becky: we're in whole foods and earth fare and fresh market, as well, so they can just pick it up at the grocery store. -lemonis: oh, you are? -john: yes. lemonis: that's nice. who got that account? -becky: the previous owner. -john: previous owner. lemonis: and what will the entire business do? john: we did $840,000 last year. lemonis: how much profit? john: i want to say, last year, it was $40,000 at the most. okay. this is our production area. lemonis: how much is your rent a month?
john: $2,750. $2,750. -lemonis: that's a bargain. -john: it's a bargain. and it goes to $3,000 september 1st. lemonis: and then at the end of that period, it goes to -- -becky: he'll jack it up. -john: we don't know. that's the end of the lease. lemonis: any time you can have a long-term lease, it really gives the business an opportunity to know where it's going. the longer the lease, the better the deal. becky: that's green. that's cooked. lemonis: and so, this is what the seeds look like. john: that's the seeds. lemonis: and so, there's a misnomer when people say coffee bean. john: it's a little green fruit that turns red when it's ripe, ready to be picked. lemonis: but it tastes nothing like coffee. john: no. roasted coffee undergoes the same chemical process as baked bread. lemonis: how did you learn how to roast coffee? becky: we didn't. lemonis: why haven't you learned? john: just haven't had the time. lemonis: why haven't you learned? becky: um...i mean -- lemonis: i mean, this is the whole business. both: it is. lemonis: you should really learn how to do that. it would be like owning a repair shop and not knowing how to change the oil. -john: you're right. -becky: that's true.
lemonis: roasting coffee is the single most important process of this company. everybody should know how to do it. becky: we got the master roaster when we bought it. he stuck around. he only works one to two days, so that's when i got my son to start learning to roast. he's our junior roaster, daily roaster. lemonis: it's good you have a backup, 'cause if the other guy disappears, you have a plan. becky: marcus, this is my son, bryan. -bryan, marcus. -lemonis: how are you? really nice to meet you. how long have you been doing this? bryan: about two months. maybe a little bit longer. lemonis: you like it? -bryan: uh, yeah. -becky: [ laughs ] you can tell the truth, honey. bryan: it's a challenge sometimes, but it's fun. lemonis: what's the challenge? bryan: um, the dynamics between them. i mean... lemonis: the dynamics between them are interesting? -bryan: very interesting. -lemonis: the coffee's awesome. lemonis: what's a machine like this cost? john: used, about $60,000. brand-new, about double that. lemonis: let's crank this up. i want to see how it works. i'm fascinated by it. now it's time for me to try roasting coffee.
i want to have knowledge and an appreciation for it. and so, will i see that turn brown over time? bryan: yep. lemonis: how quickly can you get product? john: three to four days. lemonis: because you're going through a distributor. and do you know how much margin you're losing through that distribution? between going to the actual farm to here? -john: i do not. -becky: we do not. lemonis: the fact that john hasn't taken the time to find out how to improve margin is troubling to me. he doesn't seem to see the importance of finding out what his cost would be by eliminating the distributor and going directly to the source. how many pounds do you roast a year today? john: a little over 100,000 pounds. lemonis: i always look for ways to save money. if we could just pick up 30 cents a pound, over 100,000 pounds, that's $30,000 a year. if you ran this like a tight machine with two shifts using every square inch of the place, what's the maximum you could roast in a week? john: probably around 7,000 pounds. lemonis: so that's about 364,000 pounds a year.
you're only producing 33% of the capacity of this facility. west end coffee roasts over 100,000 pounds of coffee a year and generates about $840,000 of revenue. but it's highly unproductive, operating at only 33% of their total capacity. if they would get sales in line, the same facility with the same equipment and the same labor could generate over 360,000 pounds of coffee, yielding them over $3 million in sales. with 50% margins, that's why this is an attractive business. [ machine beeping ] that's pretty awesome. they're good, though. bryan: it's 'cause you loaded them right. lemonis: but, of course, tasting the coffee will be the most important test. -i'm not a big coffee drinker. -john: okay. lemonis: i like coffee ice cream. does that count? -becky: yes. -john: sure. becky: it might be a little bit strong for you. john: might be a little bit strong for you,
and we make it pretty strong. -lemonis: oh, it's good. -john: but it's good. -lemonis: but it's really good. -john: and it's fresh. lemonis: it's obvious that they have a good product, and becky's son bryan shows me that the employees are motivated and they enjoy their work. the tension between john and becky could be the reason this business is really struggling. tell me the story of how you met. john: she became friends with my wife. we would hang out together. my wife and i -- my ex-wife and i had problems. i went to my wife, and i said, "if you want to try to work this out, you need to get rid of becky." lemonis: why did you want her to get rid of becky? john: so that my ex-wife and i could work it out. we were like an inner circle. there was like the three of us that were, you know... lemonis: y'all were having, like, a -- there was like a triangle thing going on? -john: sort of, yes. -lemonis: sort of. okay. john: yes. cohorts in crime, maybe. -i don't know. -lemonis: [ laughs ] [ laughing ] let me check out these recipes. [ laughter ] this is a classic case of t.m.i. i don't know what sort of graph or chart we could put up for this one, but i think we should move on.
so, how many total employees? john: seven, counting us. becky: we have bryan as a roaster. we have brandon who does repairs. john: let's go back to bryan for just a minute. i had a plan. she came in, overrode it, put him in there. becky: he wanted to interview a guy that worked at home depot in the garden department. john: i wanted to interview anybody that might have been qualified. becky: whereas bryan at least knows how we run our business. lemonis: this is how you guys coexist all the time? john: all the time. lemonis: how does it make the employees feel? john: like [bleep] lemonis: and when you guys were together in a relationship, was it normal? becky: not since we got here. this kind of really was the downfall. lemonis: can the relationship be repaired if you're not working together? john: i no longer want to be with her. i'm looking for a wife eventually. becky: there's news, 'cause he told me he was never getting married again. john: i told you i was never gonna marry you. becky: [ laughs ] lemonis: well, it's an interesting place. how do you work in this environment? i mean, i only got a dose of it. -man: very carefully. -bryan: it's been calm today.
-lemonis: today's been calm? -man #2: today's been calm. -bryan: nice and calm. -man #2: mm-hmm. if they ever get on the same page, they can do a lot. it's just...hate. hate and mistrust. bryan: i mean, i think we all do a pretty good job of knowing how to do everything. i think if you just kind of threw us into most spots, we could probably all just do it. lemonis: it's interesting to me that the employees function at such a high rate despite the negativity coming from john and becky. i need to dig into the structure of their business relationship to find out if it's the dysfunction that's holding this business back. how's the equity allocated between -- 50/50? john: i'm 82, and she's 18. lemonis: how much money did you actually give to the seller? becky: $499,000. -lemonis: $499,000? -john: yes. lemonis: and how much of cash did you put in? john: cash out of my pocket was $12,500. becky's was $77,000, cash. lemonis: so, $500,000 is what the seller was given for the purchase of the business. becky: that's right. lemonis: when you handed them a check, $77,000 came from you, $12,500 came from you personally.
-becky: $100,000 from the bank. -john: shh. lemonis: a hu-- becky: $100,000 from the bank. lemonis: so that's $200,000, about, right now. and where did the other $300,000 come from? becky: his 401 that got rolled over into the retirement pension plan, which then is a stockholder, shareholder. lemonis: slash lender. -john: yes. -becky: yes. lemonis: john and becky told me that they paid $499,000 when they purchased west end coffee. becky came up with $77,000 in cash. john came up with $12,500 in cash. they received a $100,000 bank loan, and the remaining $300,000 came from john's 401(k) retirement plan. if you look at the numbers literally, becky would actually only own 18% and john 82%, but they're acting like it's a 50/50 partnership. do you pay yourselves? john: we have only taken a $5,000 officer salary once in those two years. i was living, like, off of savings, and that's pretty much depleted. lemonis: whoa. john: yeah.
lemonis: and why haven't you listed it? becky: i don't want to sell. lemonis: do you want to sell it? john: i really don't, but i cannot continue for her to control my money. lemonis: how does she control your money? john: she has the ultimate shareholder voting majority. lemonis: how does that work? john: because she's a director on that qualified pension plan. -my mistake. -becky: all i did was sign. john: she could fire me as c.e.o. and president if there was a shareholders' meeting. lemonis: it's obvious to me that john didn't fully review the contract before signing it with becky. while john has put in most of the money either from cash or his 401(k) plan, he gave becky the right to act as a director of his 401(k) plan. this gives becky the right to actually vote him out and fire him. who's responsible for keeping all this stuff straight -- -the balance sheet, the p&l? -john: i do. i look at p&l almost daily just to see where we're at with sales-wise compared to last year. lemonis: $834,000 in sales. this is through... john: this is 2013. the next page is 2014.
lemonis: gross is actually down -- gross profit. -right? -john: correct. $83,000. lemonis: okay. what's happened? john: expenses. lemonis: when you say expenses, you mean cost -- john: i'm sorry. cost. cost of consulting. excuse me. lemonis: the bank loan. -$100,000. -john: yes. lemonis: and so, you're trending down. -right? -john: correct. lemonis: well, i'll give you a lot of credit, both of you, for putting together solid financials, but i don't know how responsible you are in managing the people here, and the biggest risk in this business right now -- -it's you guys. -john: oh, yeah. -we're what's broke. -becky: yeah. that's why i called you. lemonis: but i'm not a guidance counselor. becky: oh, i know, but... lemonis: you know what i like about both of you? becky: [ laughs ] lemonis: you have passion. even if i don't agree with the content all the time, you have passion, and that's not something that you can teach people. the criticism that i have is that the busine
is bigger than both of you. john: agreed. lemonis: you guys made this investment together. you're either gonna go forward together, or you're gonna burn together. i want to do business with people that will always do the right thing without conditions. but i just can't understand it. i need you to explain to me again why it is that you think it's okay that accidentally, you secured a right that gives you the ability to fire him from this business when you only put in 20% of all the money. i need to just hear from you, 'cause i think if i can't get a good explanation -- a true, honest explanation -- i have to leave. becky: he has threatened to fire me, and to me, that's the only thing that i have to hang onto. lemonis: you are taking his ability to control his destiny, which is what i think is driving the anger -and the hate and the mistrust. -becky: no question.
lemonis: and you know it, and you're using it as a weapon. becky: it was a twist of fate, for sure. -lemonis: it was an accident. -becky: i don't think -- -lemonis: it was an accident. -becky: totally. lemonis: and so, what reassurance does she have that you're not gonna sign the paperwork, play nice for a week, and then blow her upand bla? john: that i absolutely will give her that right and that opportunity for us to work together and build this as it originally was envisioned. lemonis: are you willing to say to him, "i'm willing to take the chance, john, to fix this issue, "but i have something that i shouldn't, and i'm gonna give it back"? are you prepared to do that?
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lemonis: you secured a right as a director in his 401(k) plan that gives you the ability to fire him from this business when you only put in 20% of all the money. are you willing to say to him, "i'm willing to give it back to you"? are you prepared to do that? becky: i am. -lemonis: right now? -becky: sure. john: that would go a really long ways, 'cause you hit the nailrig. that is what is causing the hurt and the anger -and the frustration. -lemonis: and the mistrust. john: and the mistrust. absolutely.
lemonis: i'm all about getting this business from $1 million to $5 million or $6 million. the product is good. i believe that i can create sales and generate revenue that you guys couldn't, and i feel like i bring that to the table. -so, here's my offer. -john: okay. lemonis: i'm willing to put up $200,000 for 51% of the business. $200,000 gives you the ability to buy inventory that you don't have today. out of the $200,000 that i offered them, i want $100,000 to go towards paying the debt off that they used to acquire the business. in my opinion, small businesses need to be less burdened and more focused on growing. the second $100,000 will go into working capital. as the business goes from roasting 100,000 pounds of coffee to roasting 364,000 pounds of coffee and we improve the productivity of the business, receivables will grow, and the need for more raw materials will grow, as well. john: i'm just not sure that $200,000's enough. i mean, that's valuing our business at less than $400,000. lemonis: i put the wild card discount.
john: so that's tdiscount price. lemonis: i have to discount it 'cause i have to mitigate my risk. and so, the wild card in this situation is you guys. if you guys destroy and blow this place up, i can mitigate my losses. if i'm wrong, then we all make a lot of money because i'd rather have 49% of something that does $5 million than i would own 100% of nothing. john: can we take a few minutes to talk about it, or... -lemonis: sure. -john: yeah. like he said, the big thing is, we have to start fresh, regain that trust and respect for each other. i'm willing to come in here fresh as a daisy and say, "hi, rebecca schramm. i'm john brown. "thank you for being my business partner. can we run this thing together and work together?" what do you think? becky: i agree. this is a good business. there's money here. let's get out of our own damn way. john: okay. we appreciate the opportunity.
we're both willing to put all that energy, all that effort, all that passion, all that emotion, and we'll put it into fighting for our business and building our business with you. -lemonis: okay? -john: yes, sir. lemonis: do we have a deal? becky: we have a deal. john: we have a deal. thank you, marcus. lemonis: great. we have a lot to do. hey, john, i'd like to get everybody together. it's a new day, and i'm feeling hopeful. i want to get the entire team together so i can let them know the deal that i made with john and becky and also give them the new direction. john and becky and i have made a deal for me to invest $200,000 into the company. i'll have 51% of the business. they'll share 49%. i'm 100% in charge. the nonsense has to stop. we're gonna run this like a real business. we're gonna look at packaging. we're gonna look at sales.
we're gonna look at delivery. i want to add new accounts, and if we can't handle the local people, then we're not ready for the big leagues. i believe in the product. i think the product is great. so i am here to sell coffee. i am not here to babysit. 'cause if we sell coffee, what happens? -man: we make more money. -lemonis: that's it. and if we make more money, what happens? man: we retire earlier. lemonis: we retire earlier. [ laughter ] exactly. now it's time to get this warehouse and inventory in shape. i want to take the top 10 skus, and i want to see this inventory to the brim all the time so if you're off for a day or the other roaster's not here, we can still function. because i'm gonna grow volume, i need to know exactly what it costs to make a bag of coffee. how much is the clip? john: 8 cents. -lemonis: how much is the bag? -john: 31. lemonis: so, we're at 39 now. john: plus the label's gonna be 3. lemonis: so that's 42 cents. how much is the raw bean? john: let's say, on average, $3. lemonis: that takes us to $3.42.
what else needs to go into there to get a finished product? -john: labor. -lemonis: take me to how much the labor is. john: let's figure 12. -lemonis: 12 cents? -john: yeah. right. lemonis: so it costs $3.54. and what do we sell a one-pound bag for? -john: $12. -lemonis: that margin's killer. how do you compare to the competition in terms of your cost per pound? john: most roasters do not sell a full pound of coffee. lemonis: what do they sell? john: 12 ounces. lemonis: here's the thing. the fact that you're selling 4 ounces more, you're not getting more price out of it, so you're giving away beans, and you're not getting any extra volume or any extra margin. so why do it? john: yep. you're right. lemonis: now that i know what it costs, i want to understand the process to package the coffee. -what are we doing here? -man: just filling these bags. lemonis: how do you weigh it out? man: this machine actually weighs it out for me. lemonis: so, let's see it. so, you go right here? man: yeah. not too bad. [ both laugh ] rookie!
lemonis: all right. rookie mistake. holy crap. hold on. john's probably not gonna let me in the warehouse now. man: [ laughs ] lemonis: wasting his money. hey. -becky: hello. -lemonis: how are you? hey, i wanted to let you know that at 3:30, we're meeting with the owner of larkin's and the head chef. larkin's is one of the most popular restaurant chains in all of south carolina. not only do they have four locations, but they have a massive banquet facility. try to get all of their business. and then we want to explain what the terms are, so i want you to bring whatever you need to explain how they pay, when they pay, how it works, how they order. landing them as an account for them to use west end as their sole provider would be very lucrative to the company. and then you'll obviously do the pitching, okay? john: absolutely. sure. you got it. lemonis: while larkin's is the biggest restaurant chain in south carolina, for me, this is a test drive of john and becky proving they can work together. once they prove to me that they can do that, i'll be glad to open up much bigger doors.
hello, guys. so, i brought you here today for a couple of reasons. my primary reason is, i really haven't seen you guys work together. and so, i want to see if the two of you can actually work together in a business setting. that's what this is about for me. john: we are prepared to do that. lemonis: and by the way, you better sell something, too. becky: finally comes around, and he wants apple, and he wants chocolate chip. give him [bleep] appleand. lemonis: the two of you aren't capable of owning a business.
lemonis: i'm looking for a little bit more collaboration, and you guys working together is the deciding factor for me. -it really is. -john: okay. lemonis: thas what this is about for me. john: we are prepared to do that. lemonis: and by the way, you better sell something, too. this is an important meeting for john and becky. i want them to prove to me that they can work together, and i want to see how they act around potential customers.
well, first of all, thanks for at least considering to take this meeting. i know you're getting ready for dinner, and that's tough. -man: appreciate that. -woman: great. yeah. lemonis: how many restaurants do you guys have today? man: we have four restaurants and then a banquet facility. lemonis: and how many different -- how many clients or how many customers do you see on a daily basis across all the businesses? man: we see about 1,300 on a daily basis. lemonis: so almost a half a million people a year? man: yeah, but if you add in the catering, that is actually another 75,000 to 125,000. lemonis: what's the percentage of people that actually order coffee or tea of those 600,000 people? man: 25% or 30%. lemonis: wow. larkin's sees over 600,000 customers per year, and a little over 1/3 of them order coffee. that equals about 220,000 cups per year. in one pound of coffee, you can make 40 cups of coffee. based on that, larkin's would need to order just under 5,800 pounds of coffee per year. west end sells it at a wholesale price of $7.25,
then from this one meeting alone, they would generate $42,000 a year in sales. that's 5% of their annual revenue with just one meeting. -i'll turn it over to you guys. -john: okay. we appreciate the time that you guys have given us today. i realize how valuable that is. and we're here just to tell you about west end coffee. we are a full-service coffee-roasting facility. man: it was a custom blend. becky: i don't know if we're gonna offer a private recipe for larkin's. if that's the case, we wouldn't have that on the shelf. john: to answer your question, chef, if you order that on monday, you'll have it in your kitchen on friday. so it may not necessarily be true that we would not have your coffee on the shelf. in fact, it's very likely that would have your coffee on the shelf. lemonis: we'll carry a safety stock. john: yes. there's any equipment issues, anything like that, we're here for you. woman: so you provide equipment and repairs? john: we do. i'll let becky talk a little bit about, you know, how we do that.
let's say they call in with a problem. a machine's leaking. becky: well, then we call brandon. john: well, no. i mean, then she talks to the customers, gets the information. lemonis: and we'll probably make some frequent visits -- stop by, check on the machines, make sure they're right. man #2: that was one of the things i was gonna ask. lemonis: we're not gonna wait for you to call. john: i can pledge to you that we will do everything possible to make sure that we earn your business every day, every order. lemonis: we're really asking for a shot at your business. we'll over-service the account. you'll probably be telling us, "our coffee's good. go away." becky: "leave me alone." lemonis: and our goal is to help you sell more coffee because it's great margin. john: yeah. we would love to have you guys. -woman: yeah. -john: definitely. lemonis: we're glad that you're gonna give us an opportunity for your business. woman: thank you. nice meeting you. man: thank you. lemonis: now that we've had a successful sales meeting, i want to head back to the warehouse and put an inventory system in place. for example, they carry over 35 flavors of syrups -- way too much for a small distributor. if it doesn't sell, it's got to go.
i don't really want to carry things anymore that we don't sell volume of. so, amaretto. -how many are on that? -john: this says 60 on my list. lemonis: okay. i'll keep it. blackberry. john: 11. -lemonis: butter pecan. -john: 41. lemonis: okay. butter rum. john: 8. lemonis: and what is all this over here? john: those are smoothies. lemonis: how much do you sell of it? a lot? john: we do. it's seasonal. so that's why we got stuck with the expired product, is 'cause we ordered too much. -lemonis: this is all expired? -john: yes. lemonis: why don't we just throw them out? john: 'cause that's like $4,000. lemonis: why'd you buy this much? becky: let's have that argument again. john: he's asking you a question. lemonis: it's not an argument. i'm just asking a question. i mean, we're selling expired merchandise. i'm just curious. becky: i ordered enough for a year. lemonis: you made a huge inventory mistake. becky: i'll cart them out of here in my [bleep] car 'cause i'm sick of hearing about the [bleep] smoothies, honest to god. lemonis: but, no, it's not the smoothies that i have a problem with. what i have a problem with is not having an inventory system and an ordering system.
and when you make a mistake, you just have to understand that it was a costly mistake. becky: yes. lemonis: i can't stress enough how important it is for any business to have an inventory system. a simple spreadsheet would have saved john and becky from having to throw out thousands of dollars of expired merchandise. john: so, where's that e-mail from your hotshot attorney to resign as trustee of the pension plan? becky: i'll get it in a minute. john: you're either up front and honest, or you're not. becky: i don't claim to be perfect. john: oh, no. i never said i'm perfect. but you won't admit when you make a mistake or anything else -- just like the smoothies. i thought again, "stupid, foolish me. i n work, and i can make this work," but it can't. becky: and you shook his hand. if you didn't feel like shaking his hand, you shouldn't have, because that's a gentleman's contract. john: i'll do the deal with marcus, but not with you, and especially with no resignation letter. you're horrible at doing the right things until you're forced to do it. becky: and i told marcus i would do that. john: unless i have that today, effective today, we're done.
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until you're forced to do it. becky: and i told marcus i would do that. john: unless i have that today, we're done. lemonis: so, what's the good word? john: ask her, has she done anything you asked her -- becky: you just tipped it for me. i contacted my attorney, asked him for that resignation for the director, as well as the trustee. lemonis: why isn't the paperwork signed, becky? becky: i don't have the form, but i will get the form. lemonis: it's a piece of paper, becky. becky: alls i can say is, you should probably be happy that i didn't sign it because he's contacted business brokers to try and sell it... when i'm thinking we've got a deal. and now he's out shopping around. john: i didn't say i was trying to sell it. becky: john, you did. you talked with the guy on the phone. -yes. -john: okay. so i'm gathering information. -i think this is a free country. -becky: for what?! john: i think i can get additional information. becky: the deal is done. lemonis: it's been a week, and i thought we were on the right track, but now i'm finding out that not only did becky not do the one thing i asked her to do, but john's now meeting with brokers trying to sell the business? we already have a deal. what is it that you're going to find out? find out if i took advantage of you? to find out if the price you got was right?
john: to find out if the price we got is right. lemonis: too [bleep] bad. you made a deal. and so, i don't think i gave you a bad deal. -we shook hands. -john: yes, sir. lemonis: and it meant nothing. poof. gone. john: no, that's not true. lemonis: but you were gonna go list the business. the only reason you didn't list the business is probably 'cause she wouldn't agree to sign the paper. john: no, no. that [scoffs] lemonis: becky, is that true? john: i was not going to do that. that was never my intention. lemonis: well, why did you do it?! -that's what's not clear to me. -john: because of her. i would love to do a deal between you and i. lemonis: no, but we shook hands at the table, all three of us. becky: do we want to read texts? "i'm more than done. you have no savior. "we will sell this for our original investment "and start over without each other. "marcus is irrelevant at this time. "the business will be listed for sale tomorrow, miss 18% owner. "you will be lucky to get your initial investment back, and after that, good luck." -lemonis: i got news for you. -john: okay. lemonis: um...i am relevant. i made a deal, and i bought 51% of this business. -and i can throw you out. -john: i understand that. lemonis: but i don't operate that way.
and i was the one guy that was helping you get the release of your freedom, 'cause i was the only relevant person that was able to get her to agree to do it. john: and, marcus, you're very relevant. -i apologize again. -lemonis: i'm relevant 'cause i'm standing here in your face. john: yes, sir. i get it. i understand. lemonis: i'll tell you the issue that i have. i know that i have a 51% stake in a coffee-roasting business that i think has a lot of capacity left and makes a good product. what i have to decide is who should be here and who shouldn't be. it's starting to become clear to me that john and becky can't work together, so i'm gonna figure out which one of them's gonna stay and which one of them's gonna go. who is in charge of sales? -becky: in charge of sales? -lemonis: sales. who is in charge to sell the product in this company? becky: i guess i don't understand the question. lemonis: so, when you get a new account, who's responsible for it? becky: for collecting or selling or what? lemonis: mary and joseph. who's responsible to sell the product? becky: i do. lemonis: so you're the salesperson? becky: i guess so, if you want to say that. lemonis: what's the largest customer you have right now?
-uh... -john: table 301. lemonis: if i called that customer, who would they say is their account person? john: i would say me, but they could say becky. lemonis: what would you say they'd say? becky: i would say me because e-mails come from me. lemonis: why are you guys both doing the same job? -i don't understand that. -john: right! we don't have clearly-defined roles and responsibilities, which is something i've been talking about for over a year. becky: he sucks at ordering. like, on that torani's order. they wanted the order in, and i told you we've been trying to get this guy's business for two years. john: we've got this guy's business. becky: he finally comes around, and he wants apple, and he wants chocolate chip. give him [bleep] apple and chocolate chip. john: you were flying off the handle, ready to do it without me intervening whatsoever, reviewing it or nothing. you were just gonna do it. in fact, you did it, you tried it, and it didn't work because i called and shut it down 'cause i didn't want any more of the corporate money wasted. lemonis: the two of you don't know what you're supposed to be doing. you're so busy fighting that you're not busy selling. and so the reason this business is for sale, was for sale, should be for sale is 'cause the two of you aren't capable of owning a business right now. you're not. you're not capable.
if this business has any hope of surviving, i need to convince becky that she needs to do the right thing and sign over this right that she has to control his pension plan. it may not fix everything, but i think it's a step in the right direction. why do you still hang out? becky: i want to own my own company. i want to call the shots. i want to, you know, have my own destiny. and that's the whole reason i never signed that paper, because it's like, "you're not gonna lock me out." lemonis: in business, you're gonna find yourself in situations that you either don't like or you're not supposed to be in. and with this piece of paper that you have or can sign, you really are holding him hostage. you know you are. -it's your leverage. -becky: it is. lemonis: and i'm a big believer in leverage, by the way, so i can see your point, okay? but now that we have a deal, your destiny is controlled by you and by me, not by him, because if he can't behave, then i'll throw him out. in this particular moment, you have to be able to lay your head down at night and know that you've done the right thing.
i have to know that you know how to do the right thing. that form, to me, though, is very symbolic. becky: i can appreciate that. no question. i can appreciate that. lemonis: i want you to sign the form, and i'll hold it. becky: i'm willing to try. lemonis: let's go talk to him. come on. look, it's important to always do the right thing in business, even if you feel like it's gonna turn out bad for you. two wrongs don't make a right. "...tendering my resignation in order to better facilitate the sale of stock." print that out. "hereby tendering my resignation as trustee of specialty coffee roasters, inc., retirement plan." it's what you've been asking for. -right? -john: yes. yes, sir. lemonis: "i am tendering my resignation "in order to better facilitate the sale of the stock to marcus lemonis, llc." can you sign that? becky: okay. lemonis: so, let me tell you how relevant i am. -john: okay. -lemonis: i now control you.
she doesn't control you. and so if you ever go around my back again and i find out that you're meeting with brokers, i will not only not do the deal, but i won't give you this paper. and i'm gonna leave you to the wolves. john: okay. lemonis: don't ever [bleep] with me. are we clear? -john: we're clear. -lemonis: okay. now that becky signed the document, we should be able to move forward and focus on business issues. i need to delegate roles so that everyone has a clear role here at west end. you are the inventory manager. you are responsible for everything back here. and you better know every cost on every product. you are now responsible for sales. -john: okay. okay. -lemonis: 100%. so no sales calls will come to anybody but you. -john: okay. -lemonis: nothing can be ordered and a p.o. cannot go out without two signatures. we're gonna have a check and balance all over the place, checking for mistakes, checking for inventory we don't need. it's a very tight discipline. john: let's get to work. lemonis: i've done everything i can to set up john and becky fosuccess,
and it's time for me to go away for a few weeks. i need them to prove to me they can work together when i'm not here. as far as i'm concerned, it's do-or-die time for west end. this is a cluster [bleep] you guys cannot work together. one of us has to go. if your business is in trouble and you need my help, log on to... she inspires you. no question about that. but your erectile dysfunction -
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you think you own this place, and you think you run it. lemonis: i come back at west end coffee, and, again, i'm struck by two things -- the smell of great coffee and john and becky fighting again. john: look, the bottom line is, you want me gone, i want you gone. becky: no. i can work with you. i've always said i could work with you. john: no. no. lemonis: as i look around this warehouse, i notice that they haven't done one single thing that i gave them to do. the warehouse is still full of expired products and items that don't sell, and the worst part is, they don't have one single stock of backstock coffee. it's as if i wasn't even here. -hey, guys. -john: hey, marcus. -lemonis: how are you? -john: good morning. lemonis: so, all the changes that we made back there -- they're all different again now? john: need to talk to miss rebecca on that. lemonis: there was supposed to be bags, and there were supposed to be 5-pound bags. why aren't they made? becky: the reason that we decided -- lemonis: who told you guys that you can decide that? john: it's her. lemonis: you were in charge of sales. -john: yes, sir. -lemonis: any new accounts? john: two follow-up meetings with larkin's. lemonis: interesting. i have pages from my twitter account. "i guess west end coffee
-is too busy to quote us." -john: what? lemonis: i'm not calling them out. i'm just saying he called me out. and i look like i don't have my [bleep] together. and then i talked to him, and he said to me follow-up's been terrible. do you want to be in this business? john: i want to be in this business. this is my business. lemonis: well, itour business. -excuse me. yes. -lemonis: i'm scared to have anybody come here because we can't follow up with the local restaurant, and if you guys are now not talking again, how do we deal with that? -i've been gone two weeks. -becky: he's pissed off because you took a lot of what he was doing before. -john: i'm not pissed off. -becky: that's not true, john. john: he gave it to you, and i said, "here you go." becky: he throws everything on my desk, and he says, "marcus wants you to do it all," so i've been doing it all. john: i'm a very strong business leader. lemonis: you can't even follow up on a sales call. john: well, that's a whole different story. becky: yeah, it's different when it comes to him. he gave you one thing to do -- make sales calls. lemonis: i mean, come on. this is one guy. john: i'm giving you enough rope to hang yourself. lemonis: this isn't working for me. i'm not gonna do this, play these games. it's important in business that you treat people the right way. in fact, for me, it's nonnegotiable.
i don't care if it's a co-worker, an employee, your boss, or a customer. i know relationships go bad, but when it comes to this place, you have a responsibility to make sure he gets paid, he gets paid, he gets paid, and you make money. and right now, this is a cluster [bleep] and what i don't like, john, is, i don't like how you talk to her. even if she's wrong, as men -- at least how my mother raised me -- we have a certain responsibility to be respectful to women. look at her. and you don't care. you don't care how she feels. i'm surprised her son hasn't just beat the [bleep] out of you. i don't know why he tolerates it. you know what? you guys cannot work together. one of us has to go.
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lemonis: you know what? you guys cannot work together. one of us has to go. john and becky's relationship is so toxic that i no longer believe that the three of us can work together. the only chance this business has of surviving is for one of them to go. john: he's right. one of the three of us has to go. well, it's not gonna be me. it's my money. becky: alls you want is your money. john: no. that's not all i want, is my money. becky: you've looked at buying other businesses. john: you're not majority owner. you're 18%. you better start [bleep] acting like it. becky: thanks.
you're just gonna run it into the goddamn ground. [ sobs ] [ crying ] i just feel like i've been fighting so long because i love this company. i had to fight for it. i'm not giving up on it. [ sobbing continues ] my son's grown. this is my new baby. so i'm gonna take care of her. john: i want my business, and i want to run my business my way. i just don't see a way of moving beyond that with becky. i left a $120,000-a-year job to come work for free for two years to build something. it's my baby. i paid for it. lemonis: i came here to help you guys, and i came here to make a deal, 'cause i want to be in the coffee business. my job is to make an investment in a company and go out and sell. and the minute i leave, all hell breaks loose.
john: you got marcus here to get rid of me. becky: no. john, i've always said we could work together. you continue to buck me on it. lemonis: tell me something that should make me not walk out that door. john: well, i can't speak for her, but i can speak for me. -lemonis: okay. john: i think i've proven myself. -lemonis: how? -john: i think you saw what i can do at that larkin's meeting. i saved her in that meeting. i'm not gonna say you can't do this without me. becky: i can certainly do it without you. i've done it without you since marcus left last time. i've done everything. you've sat over there and done nothing. lemonis: well, you actually didn't do everything since i left, 'cause you didn't do what i asked you to. becky: are we gonna just keep beating me up, or are we done? i mean, i don't know, marcus. i really can't take much more. i've been taking it for a year from him, and now i've gotten it from you. lemonis: you've been telling me that he abuses you and yells at you -- i've seen it. but it's hard for me to want to do business with you, too, because you didn't even follow one thing. you don't even have one bag. humor me. he failed at his task, but so did you. and so what it proved to me is that if i gave you a million-dollar account,
in my mind, you guys can't fulfill the business. why? what's your reason? becky: it's just the way we've always done it. lemonis: what you just said to me is the reason that i can't do business -- because you're unwilling to change the way you've always done it. i believe in people, process, and product. i can improve the product, we can work on the process, but sometimes, you just can't change the people. this is your resignation. john: oh! [ sighs ] lemonis: i wish you luck. becky: i appreciate that. thank you. lemonis: i wish you luck. john: thank you, marcus, for everything. -thank you. -lemonis: thanks. john: a million dollars just walked out the door. lemonis: west end coffee could have been a great business, but i don't get in business to be a mediator. i get in business to make money.
while i understand that sometimes people can't work together, in this case, there's no way that we could turn this business around with the two of them. i visit artistic stitch toniin queens, new york,... an embroidery and silk-screening business plagued by an identity crisis. sal: it's a multiplex of businesses that really work together. lemonis: that's what's called a "mall." lemonis: delusions of grandeur compelled the owner to build out his entire facility with whatever he could think of. sal: this is the restaurant. this is the sports complex. this is our baseball facility. lemonis: is it profitable? sal: no. lemonis: if i can't figure out a way to bring this company back to its original roots, artistic stitch will close its doors forever. the numbers aren't adding up here. sal: i'm this close to going home. lemonis: my name is marcus lemonis, and i fix failing businesses.